Pharma firms set to profit from bird flu scare

Bird flu moved a step closer to the UK earlier this week as preliminary tests indicated an outbreak in the Greek islands.

Bird flu moved a step closer to the UK earlier this week as preliminary tests indicated an outbreak in the Greek islands. Samples from a farm on the tiny island of Inousses were rushed for tests at a British laboratory to determine whether the deadly H5N1 virus had entered the European Union for the first time. Greek authorities imposed an immediate ban on the movement of all live poultry and poultry products from the region as initial tests showed the presence of a bird flu virus from the H5 family of strains. There is a huge number of avian influenza strains, several of them H5, but it is the H5N1 bird flu - confirmed last week to be in Turkey and Romania - which is causing world-wide alarm. It can jump the species gap' from birds to humans and has already infected some 120 people in Asia, of whom more than 60 have died.

An even greater concern is that the virus - which is currently passed only from bird to bird and from bird to human - mutates into a form that can also be passed between people, say James Chapman and Fiona Macrae in the Daily Mail. If that were to happen, one in four Britons could be infected, leading to at least 50,000 deaths, Patricia Hewitt, the health secretary, told the Commons on Monday. That is why the Government is aiming to stockpile 14.6 million doses of anti-viral drug Tamiflu. But this will take them a year and cost £200m.

At its worst, a pandemic of avian flu could have a "devastating global impact", greater than most terrorist or environmental disasters, says Jeremy Laurance in The Independent. The World Health Organisation estimates that a mild pandemic could cause between 2 million and 7.5 million deaths, but according to a United Nations spokesman, the death toll could rise as high as 150 million in a severe pandemic. Once the new virus takes hold in the human population, it will be spread round the world by international air travel "in weeks". The bad news is that existing flu vaccines are useless against avian flu. Scientists have developed a generic H5N1 avian flu vaccine that would not prevent infection with the virus but might lessen the impact of the illness and save lives. However, a high dose would be necessary, and, what with current limited manufacturing capacity, only a tiny proportion of the world's population could be protected. That just leaves antiviral drugs, such as Tamiflu. Unlike vaccines, anti-viral drugs can be used for any strain of flu, but their effectiveness is limited - they can only lessen the severity of the illness.

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Reports that pharmacists are selling out of Tamiflu have prompted warnings by the World Health Organisation against panic-buying, but that hasn't stopped the drug appearing for sale on Ebay in the UK, says Aude Lagorce on MarketWatch. One day before the end of the auction, there were already 28 bids for one packet at a price of £104. That kind of desperation has led to further plans by Swiss pharmaceutical giant Roche Holdings - which manufactures Tamiflu - to increase production. Roche has the exclusive license to make Tamiflu and so far is only just beginning to consider granting secondary licences on the grounds that it preferred to retain control of production "to ensure quality control". But now the company has said that the Food & Drug Administration has given it approval for an additional Tamiflu manufacturing site in the US, and that it is ready to hold talks with governments and other manufacturers about emergency production of the drug in case of any outbreak.

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Sales of Swiss pharmaceutical giant Roche's (ROG) Tamiflu bird flu treatment could reach £1bn in the next two years as governments frantically stockpile, says Allan Hall in the Evening Standard. This is a much larger figure than the company's own sales forecast earlier this year - before avian flu threatened Europe - of £385m. The profit potential is "enormous", say analysts. All this hasn't gone unnoticed by the markets, with Roche's shares already trading close to an all-time high at 188 Swiss francs. The only fly in the ointment is the company's deal with US firm Gilead, who discovered the main ingredient of Tamiflu. Gilead will cream some profits off in royalty payments for the drug, having granted Roche exclusive commercial rights in 1999 after joint development.

Roche's is not the only anti-viral drug: Relenza, produced by British giant Glaxo SmithKline (GSK), is only available in inhaler form, which makes it less appealing to patients, says Richard Wachman in The Observer. GSK is also working "flat out" to produce a vaccine that could be used to prevent bird flu from spreading to humans. The US government has also awarded a lucrative contract to French pharmaceuticals heavyweight Sanofi-Aventis (SNF) to produce a vaccine. Its bird flu research and development is much more advanced than any of its key competitors.